Why I Won’t Sign Your NDA

The other day I got to chatting with a lovely woman who reached out after reading my blog. She was interested in talking about an idea she had, how she might get it off the ground, and if I might be a good fit into the process in some capacity or another.

“I saw what you did with Spotlight Denver, and I’ve got an idea that could revolutionize the whole deal-of-the-day industry.” is how she broached the subject.

It’s always a treat to chat with folks who have taken a shine to me from my online persona alone, and taking 20 minutes to offer up whatever perspective and insight I can is a welcome break from programming. I was happy to lend an ear and wax entrepreneurial.

It wasn’t long into the conversation when she mentioned she would soon have a lawyer draw up a Non-Disclosure Agreement regarding the project, at which point I had to interject.

“Ah, let me stop you right there for a sec and let you know this up front: I will almost never sign an NDA.”

She was curious as to why. This is the explanation I gave her, spread over a couple of distinct but interrelated concepts.

There’s Nothing New Under the Sun

Between a first-time web entrepreneur and one who’s been for years working on many ventures, there is a huge gap in perspective regarding the importance, rarity, and uniqueness of ideas. Namely if you have this one great idea and that’s your ticket into entrepreneurship, you’re apt to overlook (or simply be unaware of) how interconnected and overlapping innovations are, and correspondingly unable (or unwilling) to see traces of your idea in and around stuff that’s already out there.

This perspective gap is most easy to recognize when someone alludes to their confidential idea as being like [existing web thing] for [some other niche].

“It’s like twitter, but for construction field workers”, “It’s like Yelp, but you only see reviews of people you know, like your Facebook friends”1, “It’s like AirBNB, but for wife-swapping.”

Even a revolutionary take on the deal-of-the-day industry as alluded to by my new friend has, by virtue of being rooted in an established business model, an upper bound on its originality (to say nothing of the likelihood that the million-dollar marketing or biz-dev teams of Groupon, Living Social, etc. have already had and/or explored similar ones).

Ideas are Plentiful, Good Execution is Scarce

It’s a well documentedphenomenon how idea-havin’ first timers just need a programmer to bring their vision to life, as though the idea is somehow half the battle (or 90%, as folks like me often get offered sweat equity deals–10% seems to be a popular number). But if you’ve ever tried to bring even one venture to market, you know perhaps all too well that ideas are just the starting point, and take by far the least work, time, and capital.

It’s Not a Good Sign

Say I’m just first meeting you to discuss your idea. If you prize your idea so much (in relation to everything else it will take in order to make it succeed) that you feel the need to put in legal protections from me, it’s a tell that you don’t have much going for you in this endeavor.

How do I know this? Because if confidentiality matters to you when talking high-level particulars (meaning anything shy of at least a 10 page business plan), either one of two scenarios apply.

Either (A) you’ll be blown out of the water in the open market soon after you release (this is the case in which the idea really is all it takes, which implies stronger incumbents will easily be able to catch up), or (B) you are vastly underestimating what it takes to execute successfully.

Scenario A rarely ever happens (if ever), but is understandably often feared by those with the newcomer’s perspective described above. Scenario B is much more common, and should make the thought of tethering oneself to broad and vague legal obligations even less desirable.

Your NDA Treads Heavily Upon My Right to Work

Overlap in innovations and concepts found among disparate parts of the web is ubiquitous. Any agreement that I sign to not disclose or use information shared with me in a casual engagement opens up a whole world of potentially contentious confusion about what is or isn’t okay for me to do in the future.

In an ecosystem where ideas are borrowed and remixed constantly, an NDA is a poor man’s patent that can be levied only against the signer. Never mind the existence of clear competitors: the confusion of whether or not any “secret sauce” information was shared is enough to entertain lengthy and costly litigation.

I had a fellow make a bid to buy my CoachAccountable business not long ago. Great guy, but when I ultimately decided to decline his offer he resorted to legal threats that I better not use any of the ideas we talked about, and expressed regret that he hadn’t had me sign an NDA.

In reality, if had he offered one up I simply would’ve declined.3 Signing one could have compromised my ability to build upon my business or sell it to the next suitor, and by corollary, compromised my negotiating position in the sale. It would have been the poor man’s patent in action.

NDAs Have Their Place

Are there some situations where NDAs are appropriate? You betcha. They are appropriate when there exists something both significant and tangible to disclose, representing more than just whatever popped into your head in the shower. The 10 page business plan alluded to above makes a reasonable cutoff, necessary but probably not sufficient.

The importance of having something significant and tangible is that it’s something you can point to and say “there, THAT’S what is confidential”. Without it, the reach of an NDA is too vague and undefinable. An NDA that is not highly specific nor describes boundaries to what it applies is not worth signing: sloppy legalese at best, a malicious trap at worst.

An NDA should also be dependent upon the signer being compensated in some non-trivial way, as in a condition of being hired or part of terms of a sale. Requiring one prior to that is highly suspect, and signing one, I say, is highly inappropriate.

So that’s why I won’t sign your NDA. It’s not because I don’t like you, it’s not because I want to steal your ideas, it’s not because what you’re up to isn’t important.

It’s because the ideas you are likely to share with me over coffee or in a phone conversation are otherwise plentiful, worthless in isolation, and, to some degree, completely unoriginal and already known to the world.

Notes:

Actually had this one come up. Even though their idea had roots in TWO existing websites, they were surprised I wasn’t willing sign an NDA. ↩

His riff about ideas starts at 25:24 in. Vimeo has problems jumping to the middle of a video until it’s loaded, but it’s worth the wait for the download, or just watch from the beginning–the whole talk is great. ↩

After all, it would be weird to presume that in his several months of thinking about it he would have more ideas that my partners and I had come up with during the 18 months we were actually building it. ↩

You missed a huge reason people require NDAs – to protect customer information. Often times, one party needs to disclose information about, or even just a customer name, and they cannot do so without an agreement such as an NDA in place. In a scenario like this, your refusal to sign an NDA would just seem silly. Just sign the thing and don’t tell people about what you hear..is it that hard?

This is a nice, clear explanation. I’ve had to explain the similar reasoning to folks asking me to sign. Sometimes they get bloody offended, knowing that I’m out to rip them off. Because ripping off clients is a sure way to get more work, right?

Thanks for posting this. I’ll be pointing people to it in the future, I’m sure.

May I report this post in wholesale on my site with credit + link to your site? I get the NDA request all the time and I’ve got a 10 minute explanation that I give each time on why I don’t sign NDAs unless it comes stapled with a $100k check. It’s such a drag.

Protecting customer information is a good reason for requiring a NDA. However, no business is going to start off by disclosing their customers. Remember, this was just a first meeting. If the NDA was really supposed to protect customer information, I’d have expected it after the third or fourth meeting; after both sides were fairly serious about each other.

You don’t get engaged on the first date, and you shouldn’t sign an NDA on the first phone call.

Unlike patents which are destroying the software market I can’t recall a story where an NDA screwed over an indie developer or software consultant. I have never had any ill effect from signing one if it makes my client more comfortable. I think as long as you protect your mutual interests you should be okay. I think the burden of proof would be on them that you did something against the NDA.

Jim, that specific situation has come up for me (as the potential contractor) and, while I would be happy making a one-sentence agreement not to disclose the super-secret name of the customer to any third parties, it’s not a justification to sign away my rights wholesale.

I’m all for this missive being a useful shortcut for fellow programmers-for-hire when it comes to explaining NDA distaste. In my experience people respond well to it, with both understanding and respect.

99% of the time your idea is unoriginal.
95% of the time your idea already executed.

What’s rare and impressive (to me) is when you meet someone who has all these obscure and failed startups memorized. When they hear your idea they say, “That’s just like (_____.com) they did that three years ago.’ I read a ton of tech news and I’m blown away by how many startups I’ve never heard of.

Please remove the “Programmer for Hire » ” from in front of the name for your postings. With this there, bookmarks can’t be easily recognized or sorted. We know that the posting is your Website since we are reading it. Thanks.

I agree completely, however, I believe that few blogs posts on this topic have ever discussed the effects caused by NDAs after the formation of the startup/team.
In my personal experience I was asked to agree to keeping details of a startup confidential, but it was never articulated or defined when things became “un-confidential”. It was very hard to support your startup publicly (or find interested developers) if you have no idea what you are “allowed” to say. At the time it seemed like all of the “secret sauce” details I was supposed to keep confidential was being told to potential customers and potential competitors (through biz-dev negotiations) any! Something to keep in mind before deciding to go “stealth”.

John, you make great points but you missed the #1 reason why people like you (and I) won’t sign NDAs: Because you’ve given us no reason to.

NDAs are one-sided contracts that impose significant legal burden, as you mention. Thus, they make absolutely no sense unless paired with some reciprocal value for the signer. Asking someone to sign one without expecting them to demand something in return is either incredibly ballsy or, more often, incredibly naive.

In your case it sounds like the woman may have been making at least a token offer of employment, so an NDA might not have been totally outrageous. However, as Melvin says, I would expect the NDA to appear later in the discussions, and be paired with an actual employment offer (and a check!)

I’ve had entrepreneurs seek me out, wanting advice on their startup, and still present me with an NDA… *shrug*.

Great question. There’s probably no one-size-fits-all answer, but in my experience it works well to plainly state you don’t sign NDAs, and respectfully explain whichever reason is situationally appropriate if/when they ask why. The conversation can generally be knocked out in under 5 minutes, and if you let them ask the questions to explore your rationales it works well to have them get and honor your stance on the matter (as opposed to, say, laying it all out unilaterally as though you were scolding them).

I’ve had entrepreneurs seek me out, wanting advice on their startup, and still present me with an NDA… *shrug*.

Amen. Yeah, it’s odd because developers are more or less rendering the favor of free consulting at that point. The trick, I find, is to not indulge in righteous indignation–much easier when you are aware of the perspective gap, which is quite common and understandable.

That’s a very naive approach as the majority of investors, especially VCs (angels are usually a little more relaxed about this) will want to know that anyone you’ve discussed the business with is under an NDA.

In this limited scope of what’s confidential to be protected, this should be a non-issue. Should be very easy to draw up a precise, targeted NDA protecting this information.

What the poster is lamenting (I think) is the overly-broad, blanket statement, we-want-to-own-every-tangentially-related-idea type of NDA that seems to often be pushed across a desk for no real reason.

Well put. Our web design and development agency has been against signing NDAs for all of the same reasons. In fact, I wrote up a similar blog post just over two years ago. It’s nice to see other people have had the same experience with NDAs and resonate with just saying ‘no.’

Under Common Law the entrepreneur is protected even if you don’t sign an NDA. All the NDA does is make clear you know it is a confidential idea, and so makes it easier for them to sue you. The truth is they are protected anyway. You are right not to sign one immediately, because you may already have worked on something similar or the idea may be so general that it could exclude you from the job market. You certainly wouldn’t sign one with someone who only wants to discuss an idea, because you might not even get any work from it.

Very interesting, I remember one of the very first projects I got on my desk came with an NDA. I refused to sign it because libraries which I had spent a long time creating would have effectively had a monopoly for that (potential) client (which by the way couldn’t get a quote until he told me).

NDAs are an evil tool which DOES NOT work in the web developer trade. Its like blocking my right to work – which is certainly not what NDAs were there for in the first place. He eventually told me what it was all about, and yes just another facebook like site!

I’ve found being asked for an NDA was quite useful in the past as it opened up the question about what exactly they thought they were protecting, and gave a chance to rebalance thoughts about idea vs execution. How that conversation went was a very good predictor for what it would be like working with the client later on :-) I’ve had to avoid the temptation to ask the client to sign something that means that they can’t use any of the technical solutions I might propose should they use any other developer (i.e. ‘how about having the client connect to the server through a network?’ ;-)

Any thoughts about code ownership? When delivering source code to a client (e.g. a B2B smarphone app) I usually make it clear, for example, that I’m not going to reskin it and sell it to another client, but that the project contains code libraries created by me in previous projects and that some code created in this project will be reused in new projects (e.g. iOS app-server sync code etc. etc.).

As we all know, code re-use is a basic part of professional programming, but has can cause problems in describing exactly what the client is buying. Perhaps this is an area that doesn’t benefit from going to the nth degree of detail in the contract?

Two things are obvious from your essay. You’ve never worked on a military project. You’ve never been awarded a patent.

Hey Casual,

You are correct that I’ve never worked on a military project, though I don’t know that that should be obvious from this post: it would be weird if the military were to call me up wanting to talk about some great idea they had. I reckon any engagement would more resemble the conditions in which I mention NDAs do have their place.

Right on, you rightly point to the value and importance of having the NDA issue be a real dialog. No need to be offended, no need rattle reasons for declining as though they were stupid to ask. An actual conversation goes a long way and if you do it right you can end with a better rapport with more trust, and not the opposite.

Regarding code ownership: how I handle it is simply that my clients have full rights to do whatever they want with the code I give them in a finished project, which ostensibly constitutes “ownership”. But that’s different from exclusive rights, which are never implied.

It just hasn’t come up, and by the fact you mention, that code re-use is a basic part of professional programming, I would be surprised if it ever did. If in someone’s project I use MooTools, does that mean they now own MooTools? Of course not. It would be a sticky matter to draw the line between “this code is exclusively and uniquely yours” and “this is utility code that’s been used before and will probably be used again”. Few clients would want to get into it, I reckon, and if they insisted, well, that’s not a good sign, and we’d probably bump up against how I wouldn’t want to get into it.

I work for a large Asian electronics company, I’ve started to rail against NDAs because I realise they are relatively worthless. I got to this conclusion after signing the forth NDA with a supplier for the same project, each one just being more specific than the previous.

I recently was contacted by a finance company who wanted to sell us a company, I refused to sign it because it wasn’t clear what benefit it was to us and it would have been required to have it checked by my legal team. If I signed every NDA that passed my way my legal team would never get any real work done!

This is excellent advice for dealing with those with nothing real to point to. The “this is the next Facebook, just needs a programmer” scenario.

Doesn’t apply, of course, when you are discussing a project with an established company, like Microsoft (spent 14 years there) or Apple (done that as contractor). Even in initial discussions, they normally have to reveal information of value to competitors. You won’t get across the threshold without signing an NDA; however, what’s confidential is clear, although it may indeed just take the form of an idea or plan. The mere fact that Company X is working on, or even considering, Area Y, or Product Z, may have considerable value to its competitors.

So scale and track record of who you’re talking to matter a lot. Not all NDAs are bad.

Apple currently has a clearly-stated, public policy to deal with the flood of “The next (insert product name here)”. It can use any unsolicited idea sent to it. For the very reasons you put forward.

Not signing an NDA is great advice in many cases, but not a universal rule by any means.

Another legit case for NDAs is in journalism, provided that they’re time-limited.

I used to work as an editor for infoSynWorld.com, and we signed NDAs all the time on pre-released products. The NDAs were always “we’ll let you have our hardware before it’s announced so that you can write a review, but don’t publish anything until we have our big announcement, m’kay?” Those I don’t have a problem with, and it was never an issue in practice.

Of course, those were all for clear NDA-relevant use cases and had a termination date; after that date, we could (and did) say anything we wanted to. That was the key point for me, a relevant and clear termination date.

It is rare that I come across a requirement to sign an NDA, out of 5 (in 25 years) I have signed 3. The last one was on an application for statistical analysis. My part was database and user interface, but I uncovered that the results coming from the statistical enigine were skewed. On my report, I received a reply that pointed out the fine print of the NDA that disallowed me to ever disclose any deficiency. In further discussions, I got the impression that this was not a bug, but that the outcomes were deliberately manipulated (but I have no proof of this, but the acknowledgement that the results were flawed combined with the statement that this was not going to be corrected, is telling).

That is another reason to frown upon an NDA: it can be used to force discretion for the wrong reason.

Bingo! Also, I’ve run across my share of ne’er do well devs that will take idea and run with it. Litigated against a pair that developed a program for their employer with bugs while developing a clean version and then broke off and ran with it.@WTH

@Travis
Agreed. Though one can split the NDA into two parts. A Confidentiality Agreement and a Independent Contractor Agreement. The first gives each party the option to discuss who the client is and what the work may be. It’s a small step to opening discussions. Helps to determine if it’s even something you’re interested in and whether its a good fit for both parties. Then move on to the ICA, which Travis mentions may be too broad and overreaching. The difference now being that you know the scope of work and if it’s a great opportunity and will further your knowledge/career you can decide if it’s worth pursuing the arrangement. You always have the option to draft your own ICA or cross out parts of their doc and insert language. Then let their lawyers hash out whether they’ll agree to sign. If you really want the work, whittle down the ICA to a point where you’re willing to accept it. If they don’t agree then walk, its their loss at that point.

Hey, an NDA is nothing more than a way for a business to see if you respect each other before continung a respected relatio.ship going forward. if you refuse to sign an NDA then i surely wouldnt want to do business with you because you wouldnt respect the relationship or positive discussion at hand.

Right on, your perspective on what an NDA is (and isn’t) is greatly appreciated, and we should all be so lucky as to be presented with NDAs by people who view them as such. Unfortunately an NDA, by its actual words that entail real legal consequences, is much more than a way of vetting respect–just ask anyone who’s been sued or even just legally threatened over a breach of NDA.

Great article. Many aspiring entrepreneurs are concerned that their startup will come across predators who will steal their idea. Little do they realize that protecting their idea could cause them to go out of business!

The moral of the story is NDAs/trademarks/patents/copyrights are great in theory, but unless you have the pockets to defend them, they are nothing but an expensive hobby.

As a Big Three firm investment banker, I am less concerned with your desire that we sign your NDA (we won’t give it a moment’s consideration) as much a the naïveté of the startup nation that their information is indeed protected from those who HAVE signed the worthless document. Here is a case study in startup lawyers doing real harm by providing a false sense of comfort simply to generate another page of worthless legalese to justify their fixed rate fees to Startups.
Nasty busiess, admittedly, but the startup naïveté can be breathtaking.

This is all so very interesting but now please tell me what happens when someone’s idea does fall into that 1%? Who is going to determine if the idea falls into the 99 or 1%, you? And then if it does fall into the 1% and they didn’t make you sign an NDA what happens then?
Now please also tell me this, what would happen in this case: A top Fortune 500 company comes to you with a project that they want you to work in, they are going to come and say, we have a project for you but we can’t really tell you the details until after you sign our NDA. What are you going to say in that case? Oh no, I’m sorry, I’m pretty sure it has already been done so I won’t sign your NDA until after you tell me what it is, give me the details and I can evaluate if it’s a new idea or not or after you hire me? Yeah right!
Or, what is worse, does it make a difference to you if you are approached not by that top company but by your average nerdy guy, in which case you are going to tell him you won’t sign his contract because, you again, don’t think he could possibly have an innovative idea? That doesn’t sound fair to me.
The real issue here, in my opinion, is that you fail to realize that when you are approached with a new idea you are not being invited to become someone’s business partner, you are being evaluated to be hired to do a job. People are not coming to you to tell you their ideas because they had nothing better to do that day but because they want your knowledge and experience to carry it out and if you then fail to provide them with a warranty that you won’t steal that idea, well, I guess I see why many can get offended. I know I would.
And if, in the end, an idea was not new and the inventor goes broke that’d be of his own doing and not because you came to tell him it wasn’t innovative or profitable and then you carried it out yourself.

The real issue, as far as I can see, is that NDAs are hassle and as someone demanding an NDA, you need to offer something that outweighs that hassle.

I have experience of signing NDAs with Fortune 500 companies; they don’t come up with “we have a project for you, but we can’t discuss anything with you until you sign an NDA”. Instead, they come with a credible offer of the form “we have a project in the web store area we think you’d be suited for; we expect to pay you this much to complete the project, and we estimate it’ll take you around this many months. If you’re interested, we need you to sign an NDA before we give you more details.”

There are plenty of signs that someone’s idea falls into the 1%; they’re all based around you being able to give me enough without an NDA that I want to know more, and that I judge the hassle of signing the NDA to be likely to be worth my while. It can be as little as a good presentation of the broad strokes of the idea, with a clear statement that the NDA covers the details I’ll need to actually implement it for you.

And you mention that I’m being evaluated to be hired; that, in my world, is called an interview, and NDAs come after the interview, at the point where we agree, in principle, that you’re going to hire me, and we’re sorting out details, like how much you’re going to pay me, where I’ll work etc.

“99% of the time your idea is unoriginal.
95% of the time your idea already executed.” ?

Wow, what underpaid underutilized academic created these ridiculous stats. So funny how people misuse statistics for personal benefit.

I’m going to agree w/@CasualObserver on this one.

Nearly all current utility patents have been successfully obtained using some sort of “tweaked” “also-ran” patent, product, or idea. But that doesn’t mitigate their competitive or market value.

How many of us in the corporate product or development space have said wow, that was so easy. Why didn’t we think of that? So clearly the ease, difficulty, or obviousness of any idea is not material in this discussion.

The rubric here is simply this: Did you think of it? If not, and regardless your personal opinions on the ubiquitous nature of the idea, related products, or the market, it is still unique and therefore has tangible market value. Yes, execution is paramount and more than not, these good or bad ideas go to the business grave. But those real stats asides, you don’t get the right to marginalize those ideas by not allowing others to protect them.

Instead of not signing, why not everyone describe what they currently know in the space to be placed as an Appendix to document at signing. THEN your “right to work” is unmolested and their idea is protected.

And isn’t it nice AND convenient to adopt an attitude or trend that empowers YOUR ability to ultimately negotiate your value to some firm by possibly leveraging ideas heard in prior conversations absent NDAs or non-circumvent language. “OH, not that you would do that” as it is often laughably asserted. Here’s MY <>. And let’s not forget that any Series A discussions with VC’s will require detailed documentation on who has or has not been privy to operational or product details. <>.

Sorry, ideas, especially in this very competitive time are paramount. Development resources, unless you’ve missed the outsourcing trends in the last 20 years, are not.

But hey, I appreciate your attempt to promote this self-serving practice. Good luck to you.

Interesting article John. I come at it from the other side – someone who is looking for people to help me execute ideas.

While most of the work certainly appears to be in the execution of an idea, I think you still undervalue the value of the idea though. @Felix makes a great example in Facebook. To surmise, Zuck went into a loose deal with the twins, then decided he could go off and “do it better”. He could have “done it better” for/with them, but his personal motivations led him to do it off his own back.

And that’s exactly what people with ideas want to protect themselves against. You may feel it takes a second to come up with an idea, and maybe a few months to really think it through, select potential partners, seek funding etc. But in most cases I think the idea is actually the result of years of sweat and toil; working in an industry long enough to see a need and think of a neat way to address it.

That special second is often just the hatching moment of an egg that’s been developing inside the shell for years. Given that, why should people with ideas risk giving them away to someone that may be a Zuck? Okay, their idea might not be 100% original, but it might have an unexplored angle, and sometimes that’s all it takes.

All that said, I get it that perhaps NDA’s do go too far, as they’re often templates drawn up by lawyers, and lawyers have the task of covering every possibility.

You know why you sign an NDA? Because your paid to create a website. Not critique it. It’s not your idea or website to alter. You do as the client says, get your money and move along. But time and time again, all web designers and programmers and coders do is think that they are the end all be all and how dare the world not appreciate them. When the system crashes and your jobs are all meaningless, everyone is going to be turning to the men with survival skills, not Xbox skills.

@Nick Thompson , I agree with you 100%. I’m also coming from the standpoint of having an idea (100,000 unique visitors in 3 months) that’s been blowing up recently, and I’m asking for people to donate their time to help (it’s an online community, long story…). In asking people for their time, I also don’t want to get screwed. It would be very easy for one of the developers to steal the code, and my site is gone. On the same hand, I don’t need a bunch of legalese. “I’m giving you access to my code, don’t steal it.” would suffice for me. Something along the lines of: http://stuffandnonsense.co.uk/projects/three-wise-monkeys/ would work most most peoples’ needs, I would imagine.

What is the issue with signing the NDA? if the buyer feels more comfortable for his/her own reasons? Maybe for funding issue and the funders will ask…”did you get an NDA?”. Saying “no” will not make you respectable in their eyes. Funders are bean counters that follow legal rules and guidelines. Trying to explain to a funder why you didn’t need an NDA is as good as telling them you don’t want their money and are wasting their time.

Ideas, processes and techniques blossom and are refined over the period of time you work with a programmer. Just because the process starts from a cloudy idea does not mean that it will not become something of value that deserves protection. The stubborn programmer refusing to sign is not an open individual meaning that the development process will lack the same. Who needs that when you are creating your masterpiece? You’ve just weeded out a programmer you don’t want to work with. I prefer working with excited and positive people.

It’s bad enough having family and close relatives shoot down your idea…now the programmer you choose to hire too. You are getting paid the money you ask for to produce…not to disgruntle negativity. Those people suck!

If your a programmer and I ask you to build out a social website for me what keeps you from telling others or talking about it. Next thing you know someone else is lounching a site before mine is reading